Exclusive | Chinese traders sell cocaine, meth and fake identities in ‘deep web’ markets
Drug traffickers, forgers and hackers use the deep web and bitcoins to avoid detection of their lucrative trade
Chinese underworld traders are now making inroads into "crypto-markets", the notorious trading places of contraband goods and untraceable digital currencies, in the "deep web" where sites are not reachable by search engines.
The South China Morning Post has found several traders on crypto-markets operating from the Chinese mainland and Hong Kong.
They offer "hard to get" Colombian cocaine, Chinese-made methamphetamine for export to the rest of the world, Chinese passports and Hong Kong university diplomas, among other contrband goods, all deliverable to your doorstep.
Customers can buy bitcoins with real-world currency in online exchanges and then use the digital currency to buy products on crypto-markets such as Silk Road, Pandora or Alpaca. Sellers can then convert their earnings into real currency without leaving a paper trail like traditional bank transfers.
At least nine traders on the dark web’s markets said they sell narcotics to the rest of the world out of the Chinese mainland. Their offers include "well-cured" marijuana from Yunnan province, "pure" synthetic stimulants and Ecstasy pills.
One trader identified as Dr Zheng, who charges US$20 (HK$155) for a gram of "bath salt" narcotics and offers free global shipping, started trading on the Silk Road platform in November last year.
Dr Zheng offers 207 types or quantities of narcotics delivered from China, and claims to provide domestic delivery in the US, New Zealand and within the European Union, skirting import customs checks there. "If you want to resell in your region please get in touch," the trader wrote in a message to custumers.
Another trader identified as Aracay charges HK$2,650 for a Hong Kong or Chinese university diploma on the C9 crypto-market. "You won’t get better quality elsewhere," the trader wrote. "Don’t risk getting scammed."
A fake Hong Kong ID card or driver's licence scan sells for HK$187.40 on Evolution, another crypto-market. Scans sometimes suffice as proof of identity for bank accounts or rental contracts. If not, sellers offer entirely new identities including passports, credit cards and forged utilities bills.
Customer reviews and product popularity statistics based on sales records seem indicate that thousands of such transactions have occurred in the past months.
These deep web traders have sprouted up only months after US federal police claimed to have dealt a fatal blow to crypto-market operators.
On October 1 last year, officers from the US Drug Enforcement Administration arrested Ross William Ulbricht. The 29-year old was accused of being the man behind Silk Road, the deep web’s main crypto-market at the time, which according to US prosecutors had grown into a US$1 billion business selling narcotics, forgeries and hacking services.
Police seized US$150 million in bitcoins following the arrest. In February, he pleaded not guilty to charges of drug trafficking, computer hacking and money laundering.
Yet, online illicit drug trading has expanded rapidly since Silk Road was closed down, said Dr James Martin, director of research at the Centre for Policing, Intelligence and Counterterrorism at Macquarie University in Sydney, Australia.
“The online drugs market is estimated to be bigger than ever, with dozens of crypto-markets now in operation,” he said. “In some ways, the closure of Silk Road actually facilitated the strength and diversity of the contemporary online drugs market by removing a dominant player and stimulating greater competition and innovation.”
Only 34 days after Ulbricht’s arrest, the site was running again. In a statement, the new Silk Road 2.0 said it was “transforming a notoriously-violent industry into a safe online marketplace”.
“Silk Road is not a marketplace,” the statement concludes, “it’s a global revolt.”
A recent study suggested that Silk Road has now been overtaken by Agora, another crypto-market, which in August had 16,137 listings, three-quarters of them narcotics, according to the Digital Citizens Alliance, an internet security advocacy group.
Drug listings the group found on the dark web increased 28.7 per cent to to 41,207 in the first eight months of 2014.
Among the thousands of listings the Post uncovered, hundreds come from China. On Friday, police in Beijing said they have detained some 30,000 people involved in cybercrimes in a concerted campaign that began in 2011.
Entering the dark web is only the latest step that Chinese traders of illicit goods have taken to prevent prosecution. Smuggled cigarettes and fake ID cards have been traded for years on traditional online retail sites under code names.
So called “bath salts”, synthetic stimulants, can be found for sale on many Chinese retail websites.
Federal agents in the US busted the largest known case of "bath salts" imports from China in 2011. Over the span of two years, a business owner in Syracuse, New York, received 89 shipments of the synthetic narcotic, each between one and two kilograms, from China Enriching Chemistry, a company headquartered in Shanghai with a factory in Jiangsu province.
China Enriching Chemistry remains in operation, according to a staffer reached by phone. He declined to comment on reports that Chang exported bath salts.
A recent study by two criminologists, Dr Judith Aldridge at the University of Manchester and Dr David Décary-Hétu at the University of Lausanne, noted that crypto-markets like Silk Road are still relatively small in the overall international drug trade.
“Just as computers changed the way we manage and consume information, crypto-markets have the potential to change how drug markets operate in a way that may set back regulation efforts by decades,” they wrote. “Crypto-markets may very well become the innovation that fundamentally changes the drug trade in the decades to come.”
